Huge rise in proportion of BTL purchases made through limited companies
The Mortgages for Businesses brokerage says in the third quarter of this year the proportion of landlords purchasing buy to let properties through limited companies was a huge 63 percent.
This figure is up from just 21 per cent before the changes to tax relief on mortgage interest were announced in July 2015.
Mortgages for Business says this represents a sea change in landlord behaviour and includes both new purchases and transfers – that is, purchases made by landlords selling their personally-owned property to their limited company.
In contrast, the number of remortgage applications made via a limited company has remained at a fairly similar level and is not expected to rise greatly until those who have recently used a corporate vehicle to purchase property are free from early repayment charges.
In terms of market share, buy to let mortgage products available to limited companies now accounts for 16 per cent of all products, up from 13 per cent in the first half of the year. By number however, availability has remained stable at an average of 195 because the overall number of BTL products on the market dipped slightly.
Mortgages for Business also says the average interest rate of a buy to let mortgage fell to 3.3 per cent at the end of September, down from 3.7 per cent in June. Of the products available to limited companies, rates fell to an average of 4.3 per cent.
This means that rates available to limited companies are only around one percentage point higher than the average market value.